Lessors to Jet Airways Ltd are planning to ask India's aviation regulator to de-register many more planes leased to the airline, three sources said, signalling a planned bailout of the debt-laden carrier is failing to assuage their concerns.
About six lessors are expected to apply to the Directorate General of Civil Aviation (DGCA) to de-register up to 15 planes that have already been grounded, over the next 10 days, one of the sources with direct knowledge of the matter told Reuters.
This is in addition to the five planes that MC Aviation Partners, a subsidiary of Mitsubishi Corp, applied on Friday to de-register, the source said. Once de-registered, lessors can take the plane out of the country and lease them to other airlines.
While some lessors have already taken their planes out after a mutual agreement with Jet, sources say the latest applications to do so are on a non-consensual basis. This deepens the crisis for Jet that has had to ground more than three-quarters of its fleet of 119 planes, many due to non-payment to lessors, leading to hundreds of flight cancellations.
It was not immediately clear which of its lessors were planning to apply for de-registration in the coming days.
About 100 of Jet's 119 mainly Boeing planes are leased by companies such as Avolon, GE Capital Aviation Services and AerCap Holdings.
Avolon, one of the world's biggest aircraft lessors, on Thursday applied to the DGCA to take two of its planes placed with Jet outside of India, making it the first to pull planes out on a non-consensual basis.
"The lessors are really hassled," said one of the sources, declining to be identified as the discussions were private.
"Nobody wants to take risks."
Jet, India's oldest private carrier now controlled by its lenders, did not respond to requests for comment.
Reflecting the overall risk-off sentiment, Indian Oil halted jet fuel supplies to the airline from Friday noon, saying it hopes to soon resolve payment issue with Jet.
Jet shares ended down 1.6 percent in a positive Mumbai market.
DOWN TO THE WIRE
India is keen to save Jet to prevent thousands of job losses, which could potentially dent sentiment days ahead of a federal election in which Prime Minister Narendra Modi seeks to secure a second term.
Jet's lenders, led by State Bank of India (SBI), last month agreed to bail out the airline in a complex deal that involved the banks taking a majority stake in the company, while they continue looking for a new investor, and providing a fresh loan of $218 million.
The lenders said late on Thursday they intended to push forward with their plan but offered no clarity on the interim funding.
Some lessors have been sceptical about whether this proposed bailout can clear their dues on time. Several have not been paid for five to six months, a source has told Reuters.
"It's getting down to the wire. If nothing comes out by next week, I think it's done," said another source.
After Kingfisher Airlines' disorderly collapse in 2012, India modified rules in line with the Cape Town Convention, an international treaty that makes it easier for foreign lessors to repossess aircraft during payment defaults.
In theory, lessors have the option to file a complaint with the DGCA, which in turn can cancel a plane's registration within five working days. But this is subject to some conditions such as clearing dues owed to airport operators, fuel vendors, tax authorities and other private entities.
The government also needs to revise some local laws that conflict with the full implementation of the convention, making it a more complicated process in India than in some other countries.